Vinal v. Continental Construction & Imp. Co.

32 F. 343, 1887 U.S. App. LEXIS 2761

• Court: U.S. Circuit Court for the District of Northern New York
• Decided: October 20, 1887
• Status: Published

Opinion

Coxe, J.

It is well not to lose sight of the fact that this is an action at law to recover damages for the breach of an alleged contract. In such an action the court is not permitted, in the adjustment of the rights of litigants, to exercise the comprehensive powers which appertain to a court of equity.

The questions to be determined are: First. Was a valid contract entered into between General Burt and the defendant? Second. If such a contract was made, did General Burt perform it, and the defendant violate it, and, if so, was the defendant’s breach excusable?

The theory of the plaintiff is that there was an independent verbal agreement made May 25, 1881, between General Burt and the defendant, by virtue of which the defendant bound itself to build a railroad for General Burt across the state of New York. That the preliminaries to such a gigantic undertaking as was then in contemplation could be arranged without extended preparatory discussion is, of course, impossible. There was undoubtedly a conference between General Burt and the directors of the defendant on the twenty-fifth of May; hut did the conversation on that day crystalize into the agreement referred to? The presumption is, certainly, a strong one, that the occurrences of the 25th were only a part of the preliminary negotiations leading up to and merged in the formal written agreements of Majr 26th and August 11th. That men of affairs, versed in business usages, engaged as they were in an enterprise of great magnitude, should have made a contract involving millions, and left the proof to depend upon the fallible memory of man, is well-nigh incredible. Not a word appears in the minutes of the defendant on the 25th, or at any subsequent time, indicating the existence of such a contract. The written agreements of May 26th and August 11th are explicit, complete, and unambiguous. There can be no doubt that they fully express the intention of the parties; but there is in them no hint or suggestion of an agreement with General Burt, individually, to build a railroad. And yet the contention of the plaintiff is that the jury should be permitted to construct from the informal negotiations which preceded the written contracts an additional agreement, inconsistent with them, and wholly unnecessary to accomplish the desired purpose.

Remembering the different versions of this oral agreement given by the only witness who testified upon the subject, and in view of the numerous presumptions against it, it is a serious question -whether the court would permit a verdict sustaining such an agreement to stand. But let it be conceded, as perhaps it must be upon a motion of this character, that such a contract was made, that the minds of the parties actually met, that it was the intention of the defendant to bind itself to General Burt, as well as to General Burt’s company; yet it is entirely clear that it was still an agreement to build the road of the Consolidated Boston, Hoosac Tunnel & Western Railway Company, of which General Burt was the president. Divest the oral agreement of this element, and it lacks many of the essentials of a valid contract; it is vague, indefinite, and without consideration. The agreement ivas not to build a railroad for General Burt, to be owned by him as an individual; but it was, if anything, an agreement with General Burt to build a road for General Burt’s railway company, pursuant to the terms of a contract to be thereafter made. The stock and bonds of this company were to pay for the work of building the road. The company’s existence was necessary to give vitality to the contemplated project. It is, however, immaterial what interpretation is placed upon the agreement of May 25th, standing by itself; for, the moment it is read in the light of the contract of August 11th, all uncertainty regarding its import ceases. After that date there could be no doubt as to the party for whom the road was to be constructed. The agreement was then complete. Certainly, General Burt was estopped from saying, in the language of the plaintiff’s brief, that “the contract was not to build the road of any particular company” after he, as president, had signed the contract to build the road of the consolidated company. It was in the contemplation of both parties that a valid railway company existed. It was an implied covenant on the part of General Burt. Upon this basis the contracting parties met. Is it not then entirely clear that, if there was no railway company, there could be no binding contract? The plaintiff cannot avoid the force of the decree of the state supreme court of July 16, 1883, declaring the railway consolidation void ab initio. That decree was as comprehensive and drastic as language could, make it. The attempted consolidation was declared illegal and void, and the association of persons wrongfully exercising corporate rights was dissolved. The mortgage, the bonds, the stock, and the leases issued or taken by the company were declared void, and were ordered to be canceled and destroyed. All persons connected with the association were enjoined from exercising any corporate rights. A receiver was appointed. The railway company was swept out of existence. There was not, and never had been, in legal contemplation, such a consolidated company as the Boston, Iloosac Tunnel & Western Railway Company. As it was out of the defendant’s power, therefore, to build a railroad for this pretended corporation, which could not contract, and never liad a legal existence, it was equally impossible for the defendant to fulfill the agreement with General Burt to build the road for such a corporation. Tf A. should agree with B. to build a manufactory for the C. & D. Company on its premises at the comer of two designated streets, it would probably be a, defense to an action upon the contract if A. should show' that there ivas no C. & D. Company, and that the premises in question were owned by another party; and such defense would hardly bo met by the suggestion that A. might have organized another company, purchased another lot, and built a factory thereon, under a new contract which might have been made with the new corporation.

There is not the slightest pretense that the defendant promised to organize a now coloration if the one with which it contracted proved to be invalid, or that it agreed to build the road for six separate, independent corporations. Leaving out of sight the impossibility of floating a new loan, after the crash which followed the far-destroying judgment of the state court, it is enough to say that the defendant was under no obligation whatever, oral or written, to General Burt, or to any other individual or corporation, to attempt the construction of a new company out of the shattered fragments of the old. General Burt and the construction company embarked in a colossal enterprise, largely speculative in character, it failed, and involved in disappointment and disaster all connected with it. No reason can be suggested why one of the joint promoters of this project should saddle his losses upon his associates. Indeed, considering the ruin which followed General Burt’s abortive attempt to organize a company, and his failure to pay a dollar on his subscription of?j;3,000,000 to the stock of the defendant, it might almost be said that justice; would not be profaned if the position of the parties on the record were reversed.

The re-examination of the questions involved has only strengthened the opinion formed at the trial that the plaintiff is without a cause of action. The motion for a now trial is denied.